How To: Qualify for a Mortgage Loan

The time is right and you’re ready to buy a home. But qualifying for a mortgage seems daunting. Where do I start? How do I qualify? What if my credit is low? These are all valid concerns, but fear not. This guide will help you navigate the process of qualifying for a mortgage.

Qualifying for a mortgage loan is simply the bank making sure that you’re able to afford the loan. They look at your financial records and reports to ensure that you’re not a bad investment.

This first order of business is determining a down payment. While 20 percent down seems to be the norm, it may not be the case. Depending on your credit you may be able to make a smaller down payment. Some loans allow you to put less than five percent down.

The second component of qualifying for a home loan is your FICO score. In order to prove to the bank that you’re good at keeping up with payments, your credit score is important. While many people think you need a credit score over 780 that may not be the case. In reality, the average credit score people need when qualifying for a mortgage is 722.

If your credit score is less than perfect, don’t worry; there’s time to change that. Follow these guidelines to help boost your credit score.

Check your credit annually. Every year you’re entitled to a free credit report. If you notice any errors, dispute them.

Make timely payments.

Don’t overuse your credit cards. Keep the balance relatively low.

Don’t take out credit unnecessarily.

The best way to determine how qualified you are to buy a home is to get a recommendation on a good lender from someone who works with lenders all the time (not just a friend or colleague who used Joe Loan Officer once or twice). When you’re ready to buy a home, contact professional Realtor Cary Amo in Lafayette, California for all your real estate needs.